Indian shares, bonds rally on strong foreign fund buying

Indian shares rose nearly 2 per cent, posting their biggest daily gain in over three months, while bonds also rallied, on hopes that foreign investors would continue to buy into markets despite uncertainty about the outlook for US interest rates. The strong gains on Thursday made India an outlier given that other emerging Asian markets fell after the Federal Reserve suggested it could raise interest rates faster than expected when it starts increasing, although it renewed its pledge to keep borrowing costs low for a ‘considerable time.’ Traders cited speculation of strong inflows into India, with investors noting the country could better weather any Fed-related volatility due to a recovery in domestic economy and the government's efforts to rein in deficit. The benchmark 10-year bond yield fell 4 basis points to 8.46 per cent, its lowest since July 28, while the rupee was up 0.06 per cent, according to Reuters.